Hua Hong Semiconductor Limited — Proxy Solicitation & Information Statement 2019

Mar 11, 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in Hua Hong Semiconductor Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1347)

FURTHER GRANT OF SHARE OPTIONS UNDER SHARE OPTION SCHEME AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A notice convening the extraordinary general meeting (“ EGM ”) of Hua Hong Semiconductor Limited (the “ Company ”) to be held at 288 Halei Road, Shanghai, PRC, 201203 on 28 March 2019 at 10:30 a.m. is set out on pages 9 to 10 of this circular. A form of proxy for use by the Shareholders at the EGM is enclosed herein. Such form of proxy is also published on the websites of the Company and of The Stock Exchange of Hong Kong Limited.

Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy for use at the EGM in accordance with the instructions printed thereon and return the same to the Company’s share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof should you so wish.

12 March 2019

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
APPENDIX I: SUMMARY OF THE PRINCIPAL TERMS OF THE 2018
OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
APPENDIX II: SUMMARY OF THE PRINCIPAL TERMS OF THE 2019
OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . .	9

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

• “Board”

the board of directors of the Company;

• “Company” Hua Hong Semiconductor Limited, a company incorporated in Hong Kong with limited liability and the issued securities of which are listed on the Stock Exchange;

• “Director(s)” the director(s) of the Company, including executive and non-executive director(s);

• “EGM”

• the extraordinary general meeting of the Company to be held on 28 March 2019 at 10:30 a.m. for the purpose of considering and, if thought fit, approving among other things, the grant of the 2018 Options and the 2019 Options or any adjournment thereof;

• “Exercise Price”

• the price per Share at which the Shares of the Company are to be subscribed pursuant to the exercise of Options by the grantees;

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

• “Independent Non-Executive Director”

• an independent non-executive Director of the Company;

• “Latest Practicable Date”

• 6 March 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular;

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange;

• “Option(s)”

• an option to subscribe for the shares of the Company pursuant to the terms of the Share Option Scheme;

• “PRC”

• the People’s Republic of China, which for the purpose of this circular, excludes the Hong Kong, the Macau Special Administrative Region and Taiwan;

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DEFINITIONS

• “Rules”

Trial Measures for Implementing the Equity Incentive System by State-Controlled Listed Companies (Overseas)* (國有控股上市公司(境外)實施股權激勵試行 辦法) as promulgated by the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance;

• “Share(s)” ordinary shares of the Company;

• “Shareholder(s)” holder(s) of the Shares;

• “Share Option Scheme”

• the share option scheme of the Company adopted at the extraordinary general meeting of the Company on 1 September 2015;

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited;

• “2018 Options”

the grant of 34,500,000 share options (the details of which were contained in the Company’s announcement dated 27 December 2018) under the Share Option Scheme granted on 24 December 2018 and proposed to be approved at the EGM pursuant to the requirements of the Rules;

• “2019 Options”

the further proposed grant of 4,000,000 share options under the Share Option Scheme, expected to be granted on or about 23 December 2019 (the details of which will be announced in an announcement of the Company in compliance with the Listing Rules), proposed to be approved at the EGM pursuant to the requirements of the Rules; and

“$”

Hong Kong dollars.

• For Identification Purpose only

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LETTER FROM THE BOARD

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HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1347)

Executive Directors: Suxin Zhang (Chairman) Yu Wang (President)

Non-executive Directors:

Registered office: Room 2212 Bank of America Tower 12 Harcourt Road Central, Hong Kong

Jianbo Chen Yang Du Takayuki Morita Jun Ye

Independent Non-Executive Directors: Stephen Tso Tung Chang Kwai Huen Wong, JP Long Fei Ye

12 March 2019

To the Shareholders

Dear Sir or Madam,

FURTHER GRANT OF SHARE OPTIONS UNDER SHARE OPTION SCHEME AND NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with further details of the grant of the 2018 Options and the 2019 Options and give you notice of the EGM.

GRANT OF THE 2018 OPTIONS AND 2019 OPTIONS

Pursuant to the Share Option Scheme, the Company has granted 30,250,000 Options to subscribe for up to a total of 30,250,000 Shares to certain employees of the Company and the Directors on 4 September 2015. Two thirds of the 30,250,000 Options vested on 4 September 2017 and 4 September 2018 respectively. To attract, retain and provide incentives to the

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LETTER FROM THE BOARD

employees of the Company and the Directors and to provide them with the opportunity to obtain Shares and to link their interests closely to the operating results and share performance of the Company with the view to increasing the value of the Company, the Directors propose to grant the 2018 Options and 2019 Options under the Share Option Scheme to certain employees of the Company and the Directors to subscribe for up to 34,500,000 Shares and 4,000,000 Shares in 2018 and 2019 respectively. Pursuant to the requirements of the Rules, the proposal shall be put to the Shareholders for approval at the EGM.

The 2018 Options and the 2019 Options contain provisions relating to performance targets that need to be achieved before an Option can be exercised and a minimum period for which an Option must be held before the Option can be exercised. The Directors believe that such conditions will serve to incentivise participants to use their best endeavors in assisting the growth and development of the Company, as well as to provide the appropriate incentives for Participants to remain as eligible participants, thereby enabling the Company to continue to benefit from the services and contributions of the eligible participants. A summary of the principal terms of the 2018 Options and 2019 Options are set out in the Appendix I and Appendix II to this circular respectively.

As of the Latest Practicable Date, there were 1,284,831,226 Shares in issue. Assuming there is no change to the issued share capital of the Company in the period commencing from the Latest Practicable Date to the date of the EGM, the number of Shares that may be issued pursuant to the 2018 Options and the 2019 Options will be 38,500,000 Shares, representing 3% of the issued share capital of the Company as at the date of the EGM.

CONDITIONS OF THE APPROVAL OF THE GRANT OF THE 2018 OPTIONS AND THE 2019 OPTIONS

The grant of the 2018 Options and 2019 Options under the Share Option Scheme is not subject to shareholders’ approval under Chapter 17 of the Listing Rules. However, under the Rules, the grant of equity incentive must be approved by shareholders of the relevant company before they could take effect. The grant of the 2018 Options and 2019 Options are subject to the requirements of the Rules because the Company constitutes a state-controlled overseas listed company. Accordingly, the 2018 Options and the 2019 Options shall only take effect subject to and conditional upon the passing of an ordinary resolution to approve the grant of the 2018 Options and the 2019 Options by the Shareholders.

EGM AND VOTING

A notice of the EGM which contains the resolution to approve the grant of the 2018 Options and the 2019 Options is set out from pages 9 to 10 of this circular.

Whether or not you are able to attend the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible, and in any event

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LETTER FROM THE BOARD

not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof (as the case maybe). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case maybe) should you so wish.

For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Tuesday, 26 March 2019 to Thursday, 28 March 2019 (both days inclusive), during which period no transfer of Shares in the Company will be registered. In order to qualify for attending and voting at the EGM, all transfers, accompanied by the relevant certificates, must be lodged with the branch share registrar of the Company, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong by no later than 4:30 pm on Friday, 22 March 2019. All persons who are registered holders of the Shares on Thursday, 28 March 2019, the record date for the EGM, will be entitled to attend and vote at the EGM.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder had a material interest in the approval of the grant of the 2018 Options and the 2019 Options and accordingly, no Shareholder is required to abstain from voting at the EGM.

VOTING BY WAY OF POLL

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at a general meeting must be taken by poll except where the chairman of the general meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The chairman of the EGM shall therefore demand voting on the resolution set out in the notice of the EGM be taken by way of poll pursuant to Article 64 of the articles of association of the Company.

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LETTER FROM THE BOARD

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

RECOMMENDATION

The Directors consider that the approval of the grant of the 2018 Options and the 2019 Options is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend all Shareholders to vote in favour of the resolution to be proposed at the EGM.

Yours faithfully, On behalf of the Board Hua Hong Semiconductor Limited Mr. Suxin Zhang

Chairman and Executive Director

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SUMMARY OF THE PRINCIPAL TERMS OF THE 2018 OPTIONS

APPENDIX I

The following is a summary of the principal terms of the 2018 Options proposed to be approved at the EGM:

Date of grant: 24 December 2018 Exercise Price of 2018 Options HK$15.056 granted:

Number of 2018 Options granted: 34,500,000

Closing price of the Shares on HK$14.440 the date of grant:

The average closing price of the Share for the five business days immediately preceding the date of grant:

HK$15.056

Validity period of the 2018 Options:

From 24 December 2018 to 23 December 2025 (7 years), both dates inclusive

Vesting period of the 2018 Options:

For employees at or above the level of vice president of the Company (together with the Directors), one fourth of the 2018 Options shall vest on each of 24 December 2020, 24 December 2021, 24 December 2022 and 24 December 2023; for the other employees of the Company, one third of the 2018 Options shall vest on each of 24 December 2020, 24 December 2021 and 24 December 2022

The Exercise Price represents the higher of (i) the closing price of HK$14.440 per Share as stated in the daily quotation sheets issued by the Stock Exchange on the date of the grant; (ii) the average closing price of HK$15.056 per Share as stated in the daily quotation sheets issued by Stock Exchange for the five business days immediately preceding the date of grant; and (iii) the face value of the Share.

Among the 34,500,000 2018 Options, 680,000 2018 Options were granted to the Directors, subject to their respective acceptance. Details of which are as follows:

	Position(s) held with
Name of Director	the Company	Number of 2018 Options
Takayuki Morita	N/A	80,000
Yu Wang	President	600,000

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APPENDIX II SUMMARY OF THE PRINCIPAL TERMS OF THE 2019 OPTIONS

The following is a summary of the expected principal terms of the 2019 Options proposed to be approved at the EGM:

Expected Date of grant:

on or about 23 December 2019

Expected Exercise Price of 2019 Options:

The exercise price shall be determined on or immediately before the date of grant of the 2019 Options, and shall in any event represents the higher of (i) the closing price per Share as stated in the daily quotation sheets issued by the Stock Exchange on the date of grant; (ii) the average closing price per Share as stated in the daily quotation sheets issued by Stock Exchange for the five business days immediately preceding the date of grant; and (iii) the face value of the Share.

Number of 2019 Options to be granted:

4,000,000

Validity period of the 2019 Options:

From 23 December 2019 to 22 December 2026 (7 years), both dates inclusive

Vesting period of the 2019 Options:

For employees at or above the level of vice president of the Group (together with the Directors), one fourth of the 2019 Options shall vest on each of 23 December 2021, 23 December 2022, 23 December 2023 and 23 December 2024; for the other employees of the Company, one third of the 2019 Options shall vest on each of 23 December 2021, 23 December 2022 and 23 December 2023

The 2019 Options are expected to be granted to the employees and directors of the Group, in particular, the Hua Hong Semiconductor (Wuxi) Limited, a non-wholly owned subsidiary of the Company. The 2019 Options are expected to be granted in accordance with terms mentioned hereinabove, and shall in any event be granted in accordance with the Listing Rules. An announcement shall be made by the Company with the details of the grant of the 2019 Options in compliance with the Listing Rules as and when the 2019 Options are granted.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1347)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ Extraordinary General Meeting ”) of HUA HONG SEMICONDUCTOR LIMITED (the “ Company ”) will be held at 288 Halei Road, Shanghai, PRC, 201203 on 28 March 2019 at 10:30 a.m. to consider and, if thought fit, pass (with or without modification) the following resolution as ordinary resolution:

ORDINARY RESOLUTION

“THAT, the grant of 34,500,000 share options on 24 December 2018 (the “ 2018 Options ”) and a further grant of 4,000,000 share options expected to be granted on 23 December 2019 (the “ 2019 Options ”) under the share option scheme adopted by the Company on 1 September 2015 (the “ Share Option Scheme ”), be and are hereby approved, adopted and ratified as at the date of passing this resolution and that the directors of the Company (the “ Directors ”) be and are hereby authorised to do all such acts and to enter into all such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the 2018 Options and the 2019 Options, including but without limitation:

• (a) to manage and administer the 2018 Options and the 2019 Options;

• (b) to modify and/or amend the 2018 Options and the 2019 Options from time to time, provided that such modification and/or amendment is effected in accordance with the provisions of the 2018 Options and the 2019 Options;

• (c) the Directors be and are hereby authorised to grant options to subscribe for Shares in accordance with the rules of the 2018 Options and the 2019 Options as at the date of passing of this resolution, and to allot and issue from time to time such number of Shares as may fall to be issued pursuant to the exercise of the options under the 2018 Options and the 2019 Options, provided always that the total number of Shares subject to the Share Option Scheme, inclusive of the 2018 Options and the 2019 Options, when aggregated with any Shares subject to any grants after the date of passing this resolution pursuant to any other share option schemes of the Company, shall not exceed 10% of the relevant class of the Shares in issue as at the date of passing this resolution, but the Company may seek approval of its shareholders in general meeting for refreshing the 10% limit under the Share Option Scheme and any other share option schemes of the Company, and the maximum number of

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company in issue shall not exceed 10% of the relevant class of the Shares in issue from time to time; and

• (d) to take all such steps as may be necessary, desirable or expedient to carry into effect the 2018 Options and the 2019 Options from the close of business of the day on which this resolution is passed.”

By Order of the Board Hua Hong Semiconductor Limited Mr. Suxin Zhang Chairman and Executive Director

Shanghai, PRC, 12 March 2019

Notes:

1. The resolution at the Meeting will be taken by poll pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and the results of the poll will be published on the websites of Hong Kong Exchanges and Clearing Limited and the Company in accordance with the Listing Rules.

2. A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint one or more proxies to attend and on a poll vote instead of him. A proxy need not be a member of the Company.

3. In order to be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of authority, must be deposited at the Company’s Share Registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time fixed for holding the Extraordinary General Meeting or any adjourned meeting thereof or, in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll. In the event that you attend the meeting after having lodged this proxy form, this proxy form will be deemed to have been revoked.

4. In case of joint shareholdings, the vote of the senior joint shareholder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint shareholder(s) and for these purposes seniority will be determined by the order in which the names stand in the Register of Members of the Company in respect of the joint shareholding.

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